MADRID -- 2013 was a year of cutbacks, recession and restructuring for the Spanish media and entertainment industry.

With the country still in the throes of a financial crisis -- unemployment at a crippling 25 percent, massive public debt, higher taxes and slashed social spending -- Spain's cultural sector has been hit hard on various fronts, including by a financially strained public that has to think twice about going to the movies and lower advertising revenue for TV networks.

The top entertainment industry news stories of 2013 tell a tale of government cutbacks and job losses, but also show how Spain's industry has been adapting to survive and how some local filmmakers are enjoying a surprising creative and commercial comeback.

Here is THR's look at key news and trends that affected the entertainment industry in Spain in 2013:

Broadcaster Shut Down by Regional Government
Government cutbacks and job losses -- the main Spanish narrative of 2013 -- hit home for the domestic entertainment industry in November when the Valencian regional government closed the regional public broadcaster.

The workers' union challenged the move in court, arguing the dismissals violated labor laws. But the local government said the shutdown and firing of employees was necessary as "a restructuring of the public business sector, with the goal of making a lighter, more sustainable administration."

Spanish Producers Squeezed by Subsidy Cuts
With a backlog of unpaid state film production subsidies going back to 2011, it was clear to everyone that Spain's ailing production industry was in need of an overhaul.

A government commission presented its recommendations early in the year, calling for tax breaks, state subsidies and more investment for TV. But, come fall, little had been done, and Spanish producers accused the government of dragging its feet.

On Dec. 18, Spain's Culture Ministry finally reached an agreement with the country's film producers for a new financing model that ramps up fiscal incentives for the industry and lowers the whopping 21 percent sales tax on movie tickets introduced earlier in 2013. Another work committee is still studying the relationship between broadcasters and film production as of mid-December.

Telefonica Studios Goes Global
Spanish telecom giant Telefonica set up Telefonica Studios, a worldwide content producer that clusters the group's various production activities in Europe and Latin America under one umbrella.

Learning from the lessons of the now-defunct Telefonica Media, which snapped up blue-chip companies like Endemol more than a decade ago before going bust, Telefonica Studios plans to forge partnerships with local powerhouses in international territories.

At a stroke, Telefonica Studios became Spain's No. 1 production outfit and a leader in Latin America with more than a dozen films in the production pipeline. Telefonica's Argentine network Telefe delivered such local box-office hits as Juan Jose Campanella's Foosball, Ricardo Darin starrer The 7th Floor and Lucia Puenzo's Argentine Oscar submission Wakolda, helping domestic films take a record 17.6 percent share of domestic box office.

Spain's Atresmedia Closes Gap with Mediaset, Prisa Near Bankruptcy
With flaccid ad sales, slashed government subsidies and an increased sales tax, Spanish companies struggled to make ends meet and develop new lines of business in 2013.

Spain's Tax Police Take on Soccer Star Lionel Messi
In an attempt to mitigate the damage of the ongoing financial crisis, Spanish tax authorities sought funds wherever they could find them in 2013.

They found some in the broadcast industry by keeping a vigilant eye on advertising and revoking terrestrial digital licenses. The supreme court annulled the licenses for nine digital channels for not having been acquired at public auction. (Once the court clarifies which channels must cease activity, the government will divvy up the frequencies for telecom companies to use for 4G services.)

But in a more glamorous and headline-grabbing move, Spanish tax authorities accused Argentine soccer star Lionel Messi, who plays for big Spanish club Barcelona, and his father of tax fraud during a four-year period, amounting to more than €4 million ($5.3 million). Messi voluntarily paid €10 million ($13 million) to Spanish tax authorities, looking to settle the fraud charge.

Spanish Farewells
Some of the biggest names in Spanish cinema died in 2013. Among them, director Bigas Luna, the filmmaker who cast Penelope Cruz and Javier Bardem in their first roles, steaming up the screen in Jamon, Jamon (1992).

HBO Executive James Costos Assumes Spanish AmbassadorshipPresident Obama named HBO executive James Costos the U.S. Ambassador to Spain in 2013, sending a clear message that Spanish authorities must do more to up their game in the fight against piracy, which is rampant in Spain and has decimated the industry.

Market research firm Nielsen in 2012 estimated that some 45 percent of Spain's Internet users visit pages offering links to pirated music and film material on a regular basis. That compares to around 25 percent in the biggest European markets, according to Billboard magazine.

Just after Costos' appointment, Spain passed new laws looking to clamp down on the illegal distribution of copyrighted works.

Spanish Films Stay Strong
As of the end of the third quarter, the Spanish film industry had cornered 11.3 percent of the box office in Spain, similar its the share at the same time in 2012.

There were a dozen Spanish films released during the year that crossed the €1 million ($1.35 million) milestone at the box office. And two -- Pedro Almodovar's I'm So Excited! and Alex de la Iglesia's Witching and Bitching -- surpassed the €5 million mark ($6.75 million).

In fact, Almodovar, arguably Spain's best-known director, enjoyed his best-ever opening weekend -- $2.6 million -- with I'm So Excited!, which Warner Bros. released in Spain. When he accepted a lifetime achievement honor at the European Film Awards in Berlin in December, however, Almodovar struck a more sombre note, pledging his prize to the next generation of Spanish filmmakers "suffering" under the current conservative government.

The Next Generation Stops Playing It Safe
Spain's top two film prizes -- the Goya Awards and the San Sebastian film festival's Golden Shell -- went to unorthodox features.

Pablo Berger's Spanish retelling of the Snow White story in the silent, black-and-white film Blancanieveswalked away with 10 statues and the top honor at the Spanish Film Academy's Goya Awards ceremony, the Spanish equivalent of the Oscars. The ceremony itself made headlines for its anti-government stance.

Meanwhile, Mariana Rondon's drama Bad Hair, won the Golden Shell at the 61st San Sebastian International Film Festival. The film features a young boy whose obsession with straightening his hair worries his single mother.